It is a great pleasure for me to be here in Iraq, a Founding Member of our Organization and the birthplace of OPEC, on the occasion of such an important meeting as the 3rd Iraq Energy Forum.

I would like to thank, and pay my respects to the Prime Minister of Iraq, HE Dr. Haider Al-Abadi. It was an honour to hear him deliver his keynote address earlier. This was preceded by a very constructive meeting we had with the Prime Minister yesterday.

I would also like to thank HE Jabbar Ali Hussein Al-Luiebi, Iraq’s Minister of Oil, and the Iraq Energy Institute, for the invitation to participate at this prestigious event. HE Jabbar Ali Hussein Al-Luiebi has restored Iraq’s leadership role in OPEC since he assumed his office last summer.

In the same regard, I would like to extend my deep appreciation for the constructive, flexible and accommodating role the Iraqi leadership played in the challenging negotiations that helped bring about last year’s historic OPEC and non-OPEC decisions. The ones in Algiers at the 170th (Extraordinary) Meeting of the OPEC Conference on September 28, in Vienna at the 171st Meeting of the OPEC Conference on November 30, and again in Vienna, with the ‘Declaration of Cooperation’ with non-OPEC producers on December 10. These three landmark and historic decisions would not have been possible without the role played by Iraq.

I personally recall the positive talks I had when I visited Iraq back in October 2016, when I met with the President of Iraq, HE Dr. Fuad Masum, as well as HE Dr. Haider Al-Abadi, who were both proactive, practical and showed great leadership.

[SLIDE 2 – Disclaimer]
Excellencies, ladies and gentlemen,

[SLIDE 3]
As I am here speaking in Baghdad, I cannot pass up the opportunity to recognize Iraq’s central role, almost 57 years ago, in the setting up of the then fledging group, the Organization of the Petroleum Exporting Countries, in September 1960.

Here in this city on the banks of the rivers Euphrates and Tigris in the land of Mesopotamia near the historic Babylon, the five Founding Fathers of OPEC, Venezuela’s Juan Pablo Pérez Alfonzo of Venezuela, Abdullah al-Tariki of Saudi Arabia, Dr Tala’at al-Shaibani of Iraq, Dr Fuad Rouhani of Iran and Ahmed Sayed Omar of Kuwait gathered together in the Al-Shaab Hall, to midwife this Organization on 10–14 September 1960. This became known as the historic ‘Baghdad Conference’.

These five Founding Members representing their oil-producing nations joined together around the premise of cooperation, with a commitment to safeguard their legitimate national interests and to ensure order and stability in the international oil market. There was no fanfare, just five developing nations setting about the business of defending their legitimate national interests.

When OPEC was set up in 1960, there were some who predicted that the Organization would not last long. It seemed the odds were stacked against them, in a world where the global oil industry was previously dominated by the established industrialized powers.

Yet, little by little, OPEC began to make its mark. In this light, the formation of OPEC was a pioneering act, an act that demonstrated that even developing countries had rights. Their indigenous resources were more than just a convenience for others; a concept that every nation around the world can appreciate.

That initial small group of developing countries has now evolved into a group of 13 that is respected far and wide as an established part of the international energy community. It has overcome many challenges, and it continues to prosper.

It has helped maintain stable and regular supplies of oil to the global market; it has expanded its role on the global stage; and it has helped enhance and build better cooperation and dialogue among producers and consumers, as well as other international organizations. These are all enshrined in the OPEC Statute that was crafted when OPEC was formed, and they remain relevant today.

As a Founding Member, Iraq has played a pivotal role in OPEC’s evolution to what the Organization represents today. And it continues to show the leadership and commitment to the Organization that ensures OPEC remains engaged and relevant today.

[SLIDE 4]
In this regard, I would like to underline the three landmark decisions I made reference to at the beginning of my speech, the ones from Algiers and Vienna.

When I assumed office as OPEC Secretary General back on August 1, 2016, it quickly became evident to me that all producers, as well as consumers, had begun to fully comprehend the gravity of the oil cycle that began in mid-2014.

There was an acknowledgement that stability on a sustainable basis had eluded the industry for far too long, to the detriment of producers, like OPEC Member Countries that rely on petroleum revenues to fuel their economic development, consumers, the hydrocarbons industry, and the global economy.

There had been a sharp global inventory build between mid-2014 and the start of 2016 as supply outpaced demand. OECD commercial oil stock levels reached historic highs in early 2016.

In both 2015 and 2016, the industry also witnessed a dramatic contraction in investments. Global oil and gas exploration and production spending fell by around 26 per cent in 2015 and a further 22 per cent in 2016. Combined, this equates to above $300 billion. This was impacting not only new projects coming on-stream, but new discoveries as well.

And the industry also saw significant job losses, as well as increasing financial and operational stresses for many companies.

[SLIDE 5]
Oil market instability and imbalance was reflected in the sharp crude price decline observed between June 2014 and January 2016, when the oil price fell by an unprecedented 80 per cent. It is the largest percentage fall in the six cycles of sharp price declines we have observed over the past four decades. The depth and duration of the downturn was alarming, and so were the impacts.

To put it simply: the oil industry could not continue along this path. Something had to be done to tackle the major stresses that were suffocating the industry, and impacting current and future oil supplies.

[SLIDE 6]
It led to OPEC embarking on the most extensive consultations among OPEC Member Countries and between OPEC and non-OPEC producing nations to build consensus about the strategic urgency of restoring sustainable oil market stability in a collective manner.

This included a visit here to Iraq with an OPEC delegation where, as I mentioned earlier, I met with the Iraqi leadership.

They were all tremendously supportive of OPEC’s efforts to stabilize the oil market. I was extremely grateful for this encouragement, particularly as the country was waging, and continues to wage war against terrorism and the ISIS in Mosul, as well as other places in Iraq. Let me say that that the war you are waging against terrorism is not only for the defense of Iraq, but the region and the world as a whole.

The exhaustive and determined consultative efforts, the consistent and encouraging advocacy, and the diligence and courage of everyone involved, has been widely acclaimed, by both producers and consumers.

These historic and landmark decisions are a sign of the Organization’s commitment to all oil industry stakeholders, both producers and consumers, as well as one to the broader global community, through the restoration of oil market stability and the potential positives of this for the global economy.

[SLIDE 7]
The focus now is on the implementation of these production adjustment decisions, which are being analyzed and monitored through a Joint Ministerial Monitoring Committee (JMMC) and a supporting Joint Technical sub-Committee. These are vital for the openness and transparency required to implement these decisions in a full and timely manner.

To date, conformity with the decisions by all participating countries has been very encouraging. For January 2017, OPEC and non-OPEC nations achieved a conformity level of 86 per cent. And in February, the overall conformity improved further to 94 per cent.

However, there is still room for further improvement. Each participating nation needs to look at their individual voluntary contribution, and remember that the decisions taken last year were on the basis of fairness, equity and transparency.

In this, I am confident that all countries remain steadfast in honouring their commitments to individually achieve the 100 per cent level. This is our firm goal. We cannot seek anything less.

This commitment is vital to ensure we keep on the right path to a stable, balanced market, which contribute to improved outlooks for both the short- and long-term

[SLIDE 8]
Following these historic decisions taken last year we believe we are already seeing more favourable industry conditions. In this regard, I think it is also important to recognize just how far we have come since we fully embarked on the process of rebalancing the market and returning stability on a sustainable basis.

For example, at the end of July 2016, WTI and Brent combined net-long positions were at a level of 350,000 contracts, which then increased to 500,000 contracts on November 29, just before OPEC took its landmark decision, and then to 921,000 contracts on February 21 this year. Despite a sell-off in the second week of March, the number of net-long positions remains healthy, at around 662,000 contracts.

The market is also showing further signs of realigning, with the OECD stock overhang currently at 282 million barrels above the five-year average. This compares to a level of 380 million barrels at the end of July 2016.

We are also seeing an uptick in energy investments in 2017, when talk was only of retrenchment and investment cuts in the first half of 2016.

And equity markets today are buoyant.

Confidence is returning to the sector. We need to ensure that this positive sentiment is maintained.

[SLIDE 9]
It is also important to highlight that these recent decisions should not only be viewed as a short-term necessity. We need to view these actions as vital to long-term oil market stability and the necessary investments required for the world’s energy future.

The value of this is readily apparent in OPEC’s tenth edition of its World Oil Outlook launched last November, which sees oil demand reaching over 109 million barrels of oil a day by 2040, an increase of over 16 million barrels a day from 2015 levels. This demand growth is driven by developing countries and an expanding transportation sector, with more than one-third of the total increase expected in the road transportation sector, as well as significant growth in petrochemicals.

Moreover, as both OPEC and the International Energy Agency agree, there are no expectations for an oil demand peak in the foreseeable future. Oil will clearly remain a fuel of choice in the coming decades.

This expansion in demand will obviously require significant investments. Moreover, new barrels are needed to not only increase production, but also to accommodate for decline rates from existing fields. Overall, we see oil-related investment requirements of around $10 trillion over the period to 2040.

The industry needs timely, adequate and sustainable investment to guarantee security of supply to the global community.

[SLIDE 10]
To meet its obligations as a secure and reliable supplier of oil to world markets, I have no doubt that OPEC Member Countries remain committed to investing in new capacity and necessary infrastructure, despite the downturn we have witnessed in the last couple of years.

This is certainly true here in Iraq.

Over the past few years the country has made significant progress in raising its production capacity, despite the many above-ground challenges it has faced. It is again the second largest OPEC producer and the fourth largest globally.

It also has enormous potential for future development. In OPEC’s Annual Statistical Bulletin 2016, Iraq had the fourth largest global proven crude oil reserves in 2015 at over 142 billion barrels, which has since grown to 153 billion barrels, and the country’s reservoirs are widely regarded as some of the best in the world.

Moreover, Iraq is also ideally positioned for the large oil demand growth expected from the Asia-region in the coming decades.

Excellencies, ladies and gentlemen,

For the oil market, the focus today is on the rebalancing process and returning sustainable stability to the market. In this regard, the full and timely implementation of the historic decisions taken last year by OPEC and non-OPEC nations is vital.

For Iraq, as well as the region and the world, the focus is also on defeating terrorism and the ISIS, so as achieve the security the country and the region needs. In this regard, I know there has been significant headway made since I last visited Iraq in October 2016, and I am sure this progress will continue.

There is no doubt that Iraq post-ISIS, and with a stable oil market in place, will have the opportunities to fulfill its great economic and energy potential.